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Later on today's show we are joined by Jack Newrider, Jack is a research analyst to answer some listener mailback questions
And we'll do some on our own before that but before even that then this week and I was
Listening to the Coinbase earnings call did you know that Coinbase bought one river digital asset management?
No, what's that so what you might have heard of Eric Peters
He oh yeah, all right. Yeah. Yeah, so he was a big proponent in the institutional space of digital assets
So that went under the radar. I think I didn't know about it. That was that was in March
So relatively new news under the radars the seems to be the theme this year for crypto at least
Yeah, so so Brian Armstrong and the earnest call said
Quote and we think that's really important because 80% of Americans believe the financial system doesn't work for them
They see issues with it. They see that it's too slow. It's too expensive and quote. I
Wouldn't necessarily take on bridge with any of those issues
However, I was talking to somebody about exchanging currencies euro to dollar whatever something like that and it was a
substantial amount of money and instead of sending you know using the traditional
Rails which charge you I don't know 6% 8% whatever it is. I just threw out the idea like what about what about stablecoins?
What about?
US to US DC to euro
Easy peasy lemon squeezy. Do you know the easiest way to do it is credit card? There's credit cards that have zero
percent fees for international currency
Transfer so you use your credit card and there's no fee to do it and you pay with everything in credit card
I did not know that is there is there a limit?
I'm think I mean depends on a credit card, but most of them will say like zero transaction fees internationally
So that's your that's how you do it. That is very interesting going on your pain vacation
Maybe maybe that's what maybe maybe crypto needs its own credit card. So
Again, Brian Armstrong said it's too slow. It's too expensive
So this person said to me wait a minute. You know much it is to convert
Dollars to US DC on Coinbase now. This is not Coinbase Pro, which I'm assuming is lower
It was 3.8 percent. Oh
Okay, it seems high. I mean it seems not really in line with what they're trying to do to the financial system
But anyway, I guess credit to them their stock based compass down 54%
So maybe they're learning about
Discovering the year of efficiency. Anyway, I just thought that was interesting. All right. Let's get some questions
What's the best way to buy crypto if I don't want to open an account at Coinbase? Oh speaking of
ETF mutual fund
Something else
Okay, so they don't want to open an account at Coinbase. It sounds like they want to use a brokerage account
It would be nice if there was just a
simple ETF backed by Bitcoin or whatever that you could buy the regulators have not not green that yet for whatever reason
Does the pro shares one right the pro shares is but that's the futures one
Okay, but what's what else is there? So I'm thinking about the first 16 doesn't come to mind are
Bido. Yeah, what do you think that has an what do you think that has an asset without looking?
800 million it's less than a line hundred. It's almost a little less than a billion
Well, I assume it hasn't taken assets in right it had that big. Yeah, it's probably all the assets that came at the beginning
so
There's there's bido, which is the pro shares futures base ETF and there's micro strategy
So I'm looking at a chart. Oh, well, how about that?
They don't track each other what I can't imagine buying micro strategy as a way to
I mean well, how else do you I'm listen? I don't know how else do you do it? But anyway over the last so year to date
Bitcoin, what do we say bitcoins up 70%
Actually less today because all right, so this is not real time. So the the bido ETF is a 51%
Microstrages up 110%
Anyway, I don't know if you if you had to buy but it was down 74% last year
It's a that'd be microstrad as you'd be a leveraged bet on it right because they took on debt to buy Bitcoin
All right
So somebody asked you this question. How do I buy Bitcoin outside of Coinbase?
Will you say maybe just open an account the coin base like what would you say Robin Hood? I?
Think I think I think if you want Bitcoin or
Anything like that the easiest thing to do is probably just to buy it
You mean instead of looking for another alternative until there actually is an ETF there's nothing that perfectly tracks it right?
So open a coin base pro account or Robin Hood something like that. I mean
Yeah, it's it's hard to have a lot of faith and a lot of the third parties at this point
So I guess I don't know but pros and cons to everything so
Coinbase the fees are kind of nuts
Robinhood probably the fees are and you know you embedded you probably just I don't know get bad fails or something
But with Robin and like I said to Jack later in the show I can't move my my I can't move my crypto
It's just there there's no it is easy to move it in it's harder to move it out
Well, did you actually did you move all of your crypto out of out of Robinhood using your wallet? No, I moved it in there
Moved it in there now. You can't get it out. Yeah
You can't get it out. Well, no, yeah, I'm sure you can't be it's not easy to try it's a lot easier to transfer in than it is a transfer
out right always
All right, hey guys, California of crypto right. Hey guys skeptical about crypto
But I kind of hear the use cases
Too many bad actors at this stage just my two cents. Okay, I mean, yeah, I I hear that
Well, don't you see the isn't the rest of the question here?
Mmm, is that the same question we have clients regularly asked about crypto, but I'm nervous touch it dude
All the regulatory uncertainty. What do you guys think? No, those are separate, but whatever, okay?
We'll pretend those are the same questions based on beyond the two cents
The only thing I have to say about regulations is I'm just surprised
At how long it's taken to do anything that the regulators just don't seem to care and
But Gary Gensler taught a class at Stanford or MIT or something. So people thought he was gonna be helpful and yeah
It seemed like they're purposefully not doing anything
I just the ETF to me that that that is the one that is probably the most surprising that they just that it's taken this long to
To let a Bitcoin ETF come to market. I can't believe it's taking this long
And I don't really understand why they haven't
Said okay, I really don't get it
One of the things that people spoke about for a bull case for crypto was that the institutions would come in that
Didn't happen and might never happen guess maybe they will of prices keep going up. Who knows?
Yeah, listen that was certainly if you asked me in 2021, what was the
Near-term bull case for crypto. That's what that is what I said and I was hand up dead wrong
Yes, I this is another surprise to I agree
It seemed like institutions were ready to come in and they just almost didn't have enough time to
I don't know. It may be it is because of the regulatory stuff and that not being an ETF
I just will never know we'll never know like if if Tara Luna didn't blow up and three hours didn't blow up and
There was mass liquidation
Like there's definitely an alternate universe where it didn't crash the way that it did now
If the biggest exchange wasn't a giant Ponzi scheme, then you never know I mean right no
But but the real crash came way before when FTX blew up crip Bitcoin was already down to 20,000 right?
Yes, I
agree guess I'll never know
Hey guys, I bought too much crypto and now it's like 50% of my portfolio. I know that's too much the volatility is annoying
But I'm still really bluish long-term thoughts. I
Guess that's a pretty good not the bread
I mean it must have been 75% of the portfolio before the crash then maybe they got that if it's 50% now I
think
One of the things that bill pseudo it says to us or to clients that complain about paying capital gains taxes is
Don't worry about paying taxes because it means you kind of won the game already
So I'm sure if you if you have huge gains embedded even if you lost the money and you got it early
You're fine, but I don't know the whole 24 seven market thing like just like insane volatility
50% seems
Ted hi if I'm being honest. I mean for for that kind of market. I think you just have to figure out a like
What makes you sleep at night level and diverse lie down to that? I'm guessing this a young person and so maybe
They're rationalizing it that it's going to be a smaller procedure their portfolio as they add money to it
right like it's not like their steady state and
I
Hear this dilemma because if you're so bullish that like you would be kicking yourself
if it goes higher and
Yet you know that you have too much and you'll probably be kicking yourself if it goes lower
You're that's that's a tough spot to be in
Well, the good news is the last
Three to five years has been a good case study and man. I wish I had more in this or man
I wish I'd less than it's a true. I think you could kind of see
What you're comfortable with based on what happened? All right? Here's one one more is
A.I everything crypto thought it was going to be sure a lot of the AI stuff is people talking about what it will do for us in the future
Just like crypto in many ways, but there are already tens of millions of chat GPT users
And we still don't have a killer crypto application for regular people curious to hear your thoughts on crypto versus AI
That's good point Josh Josh what a post on that I do I do I do think that every innovation in history
People have taken it too far like thinking about what it can or will do in the future
And I just I do think crypto was the first time it happened in the social media era
so I think
I think crypto was allowed to get ahead of itself too much because
everyone had this megaphone and
You could see this stuff like the prices and stuff happening in real time
If crypto would have been somehow invented back and if the technology
Existed in the 1980s and you couldn't see tick by tick every second of the day the price
I'm guessing that we wouldn't have had the crazy blow off tops like we had in 2017 and 20
20 or 21 right it's I think it was just
almost like bad timing for crypto because
The price rise made it seem like it was our the innovation is already here and obviously it's not yet
Well, I think I think the thing that's totally different about crypto is it was trying to change the
Financial infrastructure trying to replace the rails that we've been using for the last 50 plus years
which is obviously a big hairy audacious goal whereas
Chat GBT came to market and instantly the use case was very apparently. Oh my god
This is magic crypto doesn't feel like magic. It feels like black magic or dark magic like it doesn't it doesn't feel this way so
Yeah, good question
And it's possible that we will just never have a retail use case where people were thinking like what if crypto could do this and we put
Everything in the blockchain and we can't deny this I think we will I don't know if we're gonna
I don't I'm not saying that there's gonna be a chat GBT like use case where there's like a
Light switch that on boards hundreds of millions of users overnight. I'm actually not saying at all
It's gonna be like behind the scenes if if it's gonna be a used by a lot of people
It's gonna be behind the scenes. It's not like people are gonna go
Oh, I'm hoping up the crypto app to do this or whatever. You're not gonna even know you're using it. Maybe
What do you think maybe yeah, maybe it hasn't if it hasn't I don't know if we haven't got a good use case yet
When is it gonna happen like in terms of retail adoption fair point?
And that that that's what I would just say I would say it does I guess
Ben we're still so early I
guess so it is
AI is a good good dose of you know splash of cold water on the face of crypto though to show like
So but I don't think I mean
I'm sure there are there are narrative people out there working on why AI is good for crypto
Just like the meta versus good for right that trains never late. All right. Here is our
listener mailbag questions with Jack new writer
We are joined today for the third time by Jack new writer Jack is a research analyst at Fidelity digital assets Jack
Welcome back happy to be here
before we get into some of the questions that we've got
Ben and I were at a Fidelity digital assets event in
October
2022
Which seems like eight years ago. Maybe like 15 years ago in the crypto space
That was before
That was before the SB F FTX meltdown and I think crypto with bitcoins trading like around
20,000 give or take
So we went through the whole meltdown and I'm sure there was a lot of other
Things that adversely impacted the crypto space
Here we are the prices are 20,000 then again before the meltdown and here we are it is
Monday May 8th and the price of Bitcoin is 28,000 which is kind of remarkable
So that's a good segue into our first question, which is crypto didn't work in
2021 and 2022 as inflation ramped up and now it's working as inflation comes down and
Especially during the recent bank runs. I don't get what drives price is it all just momentum traders and I would add I don't get it
Either so Jack what is it? Do you think that drives the price of digital assets?
Yeah, I mean there's certainly an element
To everything in finance that we can't calculate
But what I will say and you guys have asked me this I believe both times we did
Animal spirits talk your book episodes around the inflation piece because inflation was six seven eight nine percent
Kepticking higher and we have not moved the goalposts on this one
I'll let you know if we have to do some goalposts moving
But so far on the inflation piece around Bitcoin what I'd really say is you have to look at the entire picture
So the response function as well as sort of the backwards looking data because financial markets are forward-looking
And so if you were using forward real interest rates
Which I continue to sort of harp on is being the important marker for Bitcoin
What happened in 2022 made a lot of sense forward inflation expectations never rose materially?
They've stayed below I think 3% in the entirety of inflation running up and back down
So the bond market had been whether it's right or wrong
embedding expectations that inflation would normalize and that it was ultimately transitory
Meanwhile the response function was to raise interest rates rapidly and so that the net effect of
forward nominal yields
Increasing while forward inflation expectations, which is what you take off of real interest rates not moving means that the the opportunity
Cost for all assets rose forward real interest rates rose that means higher discount rates
That means bonds on a relative basis are more attractive
And so Bitcoin being an alternative store of value
Similar to like a digital gold is the phrasing that some people like to use it makes sense that the price of Bitcoin fell
And at the same time the Bitcoin bottomed out which happened to be during you know
You mentioned FTX and these other you know lenders sort of blowing up
Or failing so to speak and no longer existing that was in Q4 that was the same time when real interest rates topped
Towards the end of Q4 and now we've seen them sort of come back in we've seen a little bit of balance sheet expansion on global central bank balance sheets
And we've seen the price of Bitcoin rally a little bit in Q1
So to me all of that sort of does end up netting out and making some sense
But it's just a layer deeper than just looking at backwards looking inflation
It's also obvious and hindsight, but I think a lot of people realized in the last
12 to 15 months that oh, yeah, that's right crypto is a very long duration asset and it's still very young in its life cycle
And I think that's something people forgot that all the long duration assets really got hammered last year
And one of the things I think you guys do the best talking about all the time is like in the short term
Ultimately we could make a case both ways
That's what sets the market and that's probably why Bitcoin is trading 25 to 30,000 right now of yeah
There's more users than there were four or five years ago
So the long-term trend is intact, but ultimately if the dollar rallies the dollar rises and we're going into your recession or something
And you get a sell-off of equity markets then yeah, Bitcoin's probably gonna sell off
But if you stave off a
Recession and all the sudden things start to look better on the equity side and risk rallies well
Then yeah, Bitcoin's probably going to rally and so to me
It just kind of like makes sense where we're sitting currently and we're always looking at things of the bigger picture
as I think you guys always are and
so to some degree like
Yeah, I can't tell you whether we're going back down to 20 or up to 40
I think you can make a case on both sides
And there's those exogenous variables that we don't really know you know where they're headed over the next three to six months
That will ultimately dictate that
So yeah like anything else there's a lot of things that drive it especially in the short term
It could be interest rates on the cost of capital it could be the dollar or it could be inflation it could be inflation expectations
It could be just for a scapatine in general it could be adoption, but I guess what I would ask is
Over the long term. What do you expect if I had to pin you down and say what do you expect to be the single biggest driver?
Now again, there's a pie chart here, right?
So I don't know if the biggest driver is 20% of that pie or 80% or whatever it is
But what do you expect 10 years from now to have been the biggest single driver of the actual price of these digital assets?
Whether it's crypto whether it's Bitcoin or ether anything else. Yeah, I think if you ask the average person
Especially when we're looking specifically at Bitcoin and because Bitcoin is half of crypto's market cap
But was the first digital asset it tends to be the first primary mover everything follows it and then eventually they sort of run off of it
They have betas to Bitcoin to some degree you could say at some point
I think everything has its own taxonomy and will maybe start to do its own thing
But we're still you know very immature a small asset class on the grand scale
So everything looks gets looked at through sort of one lens
But when you ask that question of over the next 10 years, what's the story?
The story is that Bitcoin supply is pre-programmed that 90% of Bitcoin already exist that its its inflation rate will get halved every four years
So we're going into another halving event next year where its inflation will will move below
The rate at which gold is mined so it's it's a stock to flow ratio will be higher than gold after after next next year's halving
And if you pit that against a picture of larger and larger sovereign debts
In which you kind of look at the historical playbook when you have your your debts denominated in your own currency and you're the reserve currency
You can kind of do the math. Do you want to default on that debt which sounds extreme?
And I think it does as well or do you want to sort of implicitly default on that debt by debasing the currency
That's been sort of the toolbox that's been used and so if that toolbox gets used Bitcoin should should respond well to that
As you debase your currency
There's this alternative monetary system people can port value into and that's sort of the the major big picture pitch
But of course you have periods of tightening like right now that I would argue would be unsustainable on a 10-year basis
We're already seeing things start to break like your regional banks like you it's sort of like a balloon
You push the air one in one pocket you kind of push the problem somewhere else and we're starting to see some of that
Yeah, I'm gonna get worried if you if you say hyperinflation, I'm gonna get worried if you say not at all
What we're pitching here although in theory it does kind of hedge you to some degree to some of those outcomes
I think if you if you use that logic not that throw it out there it'll
Politically happening of course some are saying that
Not us
One more one more follow-up question to this so bitcoins up 70% year-to-day give or take
It's one of the best performing asset classes and it seems like it's like sort of under the radar
I don't know if many people
Would would know that why do you think why do you think there hasn't been this?
I don't know a headline FOMO or anything like that is it just people just got so badly burned
Like Mugato in 2000 not Mugato damn it. What was Wolf Arrow's character in Austin Powers? I can't remember either way
Do you think it's just people got so badly burned in 2022 that they're just like well once burned always shy or something like that
Yeah, I think I mean people got burned in after the 2017 run-up people also got burned after the the 2013 run-up and 2014 drawdown
It was just smaller scales each time and less capital involved
And it always took about two years to sort of get through some of those pains after the drawdown
Historically the drawdown took about a year. That's exactly what just happened
We drew down 75% and if we're using these historical analogs Bitcoin has moved in four-year cycles because of this four-year having and in theory
Some some things have reacted to that. We saw one-year drawdown
We're in the middle of sort of a one-year choppy bear market in which sentiment is sort of churning and you say like maybe Q1 was a
Turning point we kind of are starting to hear those questions
But not nobody's overly excited or like super speculative in euphoric about this run-up because you guys know the drawdown math
You go down 75% you go up 70% you're still down 50% right you got to go up 3x
In historically we've seen a year of sort of chop once you found your bottom
That's 2023 and then and then if we're using the historical analog you start to get constructive heading into next year in the year of a having
That's historically been the time where you get back to sort of old all-time highs and you start talking about
Sort of a new era in some sort of new narratives forming so maybe that history plays out
Maybe it doesn't not saying you know not making a prediction there
But certainly looks similar to what's happened historically alright Michael
I think you're looking for Mustafa I think with a guy's name Mustafa. That's right great call. All right
Let's do it when you do not let me let me get to the next one because I've got a follow up before Jack answers
How do you guys think about self storage versus the centralized platforms?
Jack I have my crypto
Unfortunately at a green leaf app that shall not be named and I can't get my crypto off for some reason
They've got like wallets that are available in most states besides from New York
So although I did try I did try self storage
I bought I think a ledger and I was I got I got very scared that it was gonna all disappear
I don't trust myself to use to use that so how do you think about or how should people think about?
self storage
Versus a platform like fidelity or one of the others. Yeah, so I think there's
You're asking on the on the individual side. There is an important delineation between the considerations that an institution has or the delegated asset manager has when they're responsible for somebody else's wealth
Versus an individual but speaking towards the individual side because I think that's that's sort of where this is coming from. I
Think the considerations are similar
You're just making your own decisions
And so ultimately it's easier to decide where you want to custody and how you want to allocate if you're allocating to an emerging
You know asset class like like Bitcoin and ETH and in the crypto space
What I would say is it's like a trade-off between whether or not you want to take a certain level of counterparty risk
And do due diligence on having a counterparty or
custody the assets yourself but thinking of it sort of like in a in the digital sense of holding a physical bar of gold
So do you want to be holding those assets yourself and do you trust yourself that you have the technical capabilities to be able to do that?
And I think I'm a horrible counterparty. I don't trust myself
Well, I think the amount of effort that one would put into to self-custing these assets has a lot to do with how much how much
In assets they actually have right and then and then they can weigh out the options of what they want to do
So it's similar like if you have a hundred dollars in your wallet
Nobody would say you're crazy
But if you have a thousand dollars in cash in your wallet and you're walking around the street
We'd start to think you're crazy and you scale that up more and more
There's similar technical trade-offs depending on how you want to custody assets
So there's hot wallets and cold wallets and some are easier to use and some are harder to use
So instead of trusting a counterparty or an entity the counterparty is yourself and your own technical capabilities when you're thinking about self-custing these assets
So you better know what you're doing when you're going into it and and at the same time
I don't think there's anything wrong with experimenting with these things you mentioned like you got a ledger a lot of people will get a ledger
Learn about it and and sort of send dust transactions
And that's how you really like feel using these networks like oh, I just made a transaction. It didn't go through a third party
Versus like if you just go to a centralized exchange and buy the asset and let it sit there
Well, great, but you can do that with an equity. You're not really using the the networks themselves
But in terms of like custodians, I do think there's this this element that that didn't matter to many
last year or prior which is
Nothing bad had happened for the past year or two in terms of major custodians
Major lenders and so everybody got laxed in terms of the due diligence that they were doing
I do think that that has come back definitely in the institutional space
But even to individuals asking the question of do I trust the the exchange or the custodian that I'm using?
Do I know whether they're holding assets in cold storage or hot wallets?
Is it an omnibus setup or segregated wallets?
Do they have a third-party auditor and who is that auditor that ensures that those tokens
Exists and that they're not re-hypoticated and went so there's a lot of considerations that go into
a how you want to hold those assets with a third party or on your own and then be how do I actually
Go about choosing like what provider to use on the custody side or what?
Technology stack to use on the South cuss city side. How do you think about?
There's a lot of places that are offshore and the regulation stuff we don't have to get into but
Some people prefer to use places that are offshore and there's us places that are considering going offshore
How do you think about how do people even?
Perform due diligence on that if there if there are no really rules regulations yet
Yeah, I don't I don't know how the individuals
Do that due diligence, but also at the same time the individuals aren't really able to use external
Non-US entities that aren't regulated in the United States, right at least legally speaking. I know that there are
US citizens that use VPNs to get access to these platforms
But I don't think that they're doing due diligence on custody if they're doing that right right so Jack
Let's say that I did decide to use my ledger
Which is like basically like a USB thing you you're sticking into your computer you would lose it in 12 days Michael
Well, that's where I was of course
That's where I was so let's just say that I left it on my desk and
One of my kids decides to oh, what's this it just throws on the garbage
Is it gone forever or is there like a cloud or it's the whole point that it's on that it's in the computer?
Depends depends on how you set it up
Typically if we're just gonna talk to like a ledger a treasure a traditional hardware wallet
What they'll have you do when you set it up is create some sort of entropy
Which is just like randomness and then they're picking from a list of around
2,000 words at random and then and then you have a seed phrase of anywhere from 12 to 24 words that actually
represents your private key so there so there's a link between these 24 words and your actual
Private key and you don't want anybody to ever have access to those those private keys or that that seed phrase
This sounds like national treasure seven
Yes
In some ways it is similar to like it's as foolish as it sounds
Because this isn't the way that the industry scales right and so I think to some degree the technology will get better and more
Embedded in traditional technology that we use on the self custody side and then the institutions in the quality of the custody from those
Institutional providers like ourselves you'll continue to get better and more complex and more comprehensive
And so like I think ultimately that's originally why Fidelity got into this space was 2015
We started mining Bitcoin and then we said how do we hold this stuff?
And then once we asked that question we said if this thing's gonna scale someone needs like a pension fund that wants to own this
Well, they need a custodian to actually hold those those keys and that's why we built the business originally
So it's like a very relevant question obviously
Alright, here's another one. I'd be curious to learn how you approach crypto with your clients
Do you ask if they own it or if they bring it up themselves? What do you say?
So this is more from the advisor side of things, but I'd be curious how how that approach works at Fidelity
Do you wait till clients are being done your doors?
You put it out there? How do you how do you deal with that with clients in terms of of letting them know crypto is available at Fidelity?
Yeah, so I think ultimately there's there's sort of a spectrum if we're talking about
The the institutional clients that we work for that we service they tend to come from a traditional background because they're working with
Fidelity for the most part. That's not always the case some crypto natives have inbound interest in our products and services
But they're of course tailored to be more simple
Non-complex conservative, you know, you can hold Bitcoin and Ethereum
And that's it and we'll hold it on your behalf and you can trade it if you want to and so what we tend to see is a group of
Traditional Fidelity investors that isn't interested in digital assets
But then there's a group that is interested and they tend to fall in one of two buckets
The first being sort of the gold bugs and the gold bug C value and something like Bitcoin potentially
The other that we see alignment in is just more being open-minded around technological advancements and the whole idea of like digital property ownership
And they tend to ask a lot of questions around Ethereum
And so if there is ever like discretionary decision-making on allocation when they're interested
They tend to be interested from one of those two avenues
But there's also sort of the third bucket which I would say honestly is probably the largest especially in the
Delegated asset management space or the wealth management space of family offices and advisors like yourselves
Which is end investors that are interested and an advisor that's sort of open-minded and thinking about planning for the future
And wants to be able to offer a product or solution rather than tell them just to go do it on their own on a third-party app
and and that comes in like a non-discretionary form where they're able to
Allocate on behalf of the client because the client has interest in the space and we tend to see a lot of that happen
I think for us it was it was mostly people who held crypto and just didn't want to do it on their own anymore
And wanted someone to both imagine a space to take care of them
You know so they could rebalance or whatever and other people who were more interested. Is that similar to you Michael?
I'm sorry. I wasn't listening. Okay. I was saying
When it came to riddles, I think the way that our clients approached it was some people were holding crypto and came to us and said
I did this on my own. I made a little money or I have some in there an allocation. I don't want to do this myself anymore
I would rather have you or someone else do it for me and make it part of my holistic plan and rebalancing and all this stuff
And then the other people who were just kind of interested in into jacks pointing other people just have no interest at all
I think that's kind of where the three buckets for us. Yeah, that's right Ben and and I apologize for
Blanking on that in my defense. I was getting a chart ready for the next question
Which is I'm looking at a glass note chart jack you sent me you sent me straight on some of the potential
Muddiness of this data, but the last question is something that actually we we discussed earlier
You guys spoke a few weeks ago about how the bull market of bitcoin is sort of quiet
Not a lot of people have talked about it be curious to hear your thoughts. Thanks. Okay, so
What I was looking at is the addresses
with a bitcoin balance over point one and that has not even for a minute
uh
Like there's basically no dips. It's almost not almost it is up until the right period. It's up until the right
uh
Is this I don't know your thoughts
Yeah very
Savvy observation on your part. Uh, what are you using glass? No, do you say yes?
Nice. Yeah, I'm a big fan of a lot of the data on glass note and if you peruse through both on the bitcoin and eth side
And we've seen consolidation to bitcoin and eth by the way if you look at bitcoin ethereum and eth tokens erc 20
Pull out stable coins out of the equation. That's almost 90 percent of crypto's market cap
So we've seen network consolidation into basically the two networks that have real users
Which is bitcoin and ethereum?
And if we look at the underlying network data and we put aside the price action
I like to say you would be pretty shocked that the price of bitcoin was down 75 percent the price of at dereum down
You know 80 85 percent at one point in june of last year
Uh because the data a lot of it is sort of up until the right like you said now
There's blips and some of it you pulled one specific metric that continues to rise
If we look at the amount of illiquid bitcoin, that's at an all-time high if we look at
Accumulator addresses addresses that have two inputs and zero historical outputs
We continue to see more accumulator addresses on bitcoin and then people that only people that are only buying
Yeah, exactly right these these agnostic like they don't care
If we were to like sort of group them into one bucket
They're just allocating a portion of their wealth into bitcoin and not thinking about the price and in theory
They're looking at it on a five ten year time horizon saying i'd rather own bitcoin than
Whatever else, you know the alternative is and we continue to see more of that happening on a relative basis
Now granted the price was down 75
Percent last year and so you have to sort of look at both of those and that I think lends itself towards the conclusion that the exogenous
Variables the the centralized exchanges that were built on unsound business practices
And and the lending and re-hypotication that was taking place in the macro environment which shifted
All was was sort of the primary drivers of the the drawdown in bitcoin and not like a lack of users
Or everybody leaving the network and no longer using it. We're seeing the exact opposite
And so over the long term you ask the question the network data keeps trending up
The price is in a pretty extreme drawdown but has seen this now four times of 75 or more
If you're a long-term investor and you're looking at this asset class and and you you know see some merit to it
I think you can get constructive around the idea that maybe this isn't the worst time to be looking at it
told you Ben
Jack
Let people know where they can find more of your research
Yeah, so we we try to make as much of our research as we can open source and available
If you go in fidelity digital assets.com backslash research
There's a spot where you can sign up and get on our research distribution list
And then i'm active on twitter at j underscore new writer
Tweeting out different things that we're seeing from our research desk on a daily basis
All right jack that was awesome as as usual. Thank you so much for coming on. We really appreciate the time
Yeah, thanks for having me
Okay, thanks to jack thanks to fidelity digital assets remember that fidelity digital assets.com if you want to learn more and email us
analyst spirits pottedgmail.com
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